NexPoint Strategic Opportunities Fund Rights Offering

Transcription

1 NexPoint Strategic Opportunities Fund Rights Offering If you are a record date holder (May 9, 2018) of NHF, you are eligible to purchase additional NHF shares in an upcoming Rights Offering by the Fund. This document will cover the following three areas regarding the upcoming NHF Rights Offering: 1. Frequently Asked Questions 2. Description of the Rights Offering 3. Subscription Logistics 1. Frequently Asked Questions Capitalized terms used herein but not defined shall have the meaning ascribed to such term in the Fund s registration statement. Q: What dates are important? Record Date: May 9, 2018 Subscription Period: May 10, 2018 to May 29, 2018 Expiration Date: May 29, 2018 Q: What is a Rights Offering? A rights offering has historically been an effective method to raise additional capital. It allows current Shareholders to purchase additional common shares at a preset subscription price, which is typically set at a discount to the Fund s recent trading price. Q: How are rights distributed? Each Shareholder is given the right to purchase additional shares based on the number of shares owned as of a defined date (the Record Date ). In this particular rights offer, Record Date Shareholders will receive one Right for each outstanding whole common share held on the Record Date. Each Right entitles the holder to purchase one new common share for every three Rights held (1-for-3). For example, if a Shareholder owned nine shares, he/she would receive nine Rights and be entitled to purchase up to three additional shares.

2 Q: What if a Shareholder is issued less than three Rights or the Rights received by a Shareholder are not evenly divisible by three? A Record Date Shareholder who is issued fewer than three Rights may subscribe, at the Subscription Price (defined below), for one full Share. Rights received by a Shareholder that are not divisible by three should be rounded down to the nearest multiple of three to determine the number of Shares a holder is entitled to purchase. For example, if a Shareholder received eight Rights, he/she would be entitled to purchase up to two additional shares. Q: Can a Shareholder purchase additional Shares in excess of the Rights issued to him/her? The offering includes an over-subscription privilege where a Shareholder who fully exercises all of his or her rights has the privilege to over-subscribe for additional shares. The oversubscription privilege is usually subject to allotment and shares will be distributed on a pro rata basis if the over-subscription allotment does not satisfy all over-subscription requests. For example, if a Shareholder received eight Rights and exercised those Rights to purchase an additional two shares of common stock, the Shareholder would have the opportunity to purchase additional Shares through the over-subscription privilege. Q: What is the Subscription Price of the Rights Offering? The subscription price per common share will be determined based upon a formula equal to the lesser of (1) 95% of the Fund s reported net asset value, or (2) 95% of the average of the last reported sales price of the Fund s common shares on the New York Stock Exchange ( NYSE ) on May 29, 2018 (the Expiration Date ) and on each of the four trading days preceding the Expiration Date. Q: Will the Rights be transferable? The Rights are non-transferable and may not be purchased or sold. Rights not exercised will expire without residual value at the close of business on the Expiration Date. Q: Are there transaction costs related with the rights offering? Shareholders will not be charged a fee if they subscribe directly through the subscription agent (American Stock Transfer & Trust Company, LLC). However, certain brokerage firms may charge a fee to exercise rights. Please consult your Financial Advisor or brokerage firm for applicable fees. The expenses related to the Offer are expected to be approximately $250,000 (assuming the Offer is fully subscribed) which will be borne by the Fund. The expenses include, but are not limited to the expenses, of preparing, printing, and mailing the prospectus and rights subscription materials and fees assessed by service providers. NexPoint Advisors, L.P. believes that the potential benefits and strategic uses of the additional equity raised through the Offer outweigh these expenses. The potential benefits and strategic uses are discussed in more detail below. Q: How long does a Shareholder have to exercise their rights?

3 The rights offering will be open for subscriptions from May 10, 2017 through May 29, Instructions on how to subscribe are described at the end of the FAQ and are further detailed in the Prospectus. Q: Will Shareholders be diluted? Shareholders who fully exercise their rights will not experience any dilution to the value of their current investment as a result of the rights offering. Dilution may be experienced by Shareholders who do not fully exercise their rights as a result of the issuance of new shares below the then-current net asset value. A Shareholder may avoid dilution by fully subscribing to the rights offering. Q: How does a Shareholder participate in the Rights Offering? Completed subscription certificates must be sent together with proper payment of the estimated Subscription Price for all Shares subscribed for in the Primary Subscription and the over-subscription privilege (for Record Date Shareholders) to the Subscription Agent by one of the methods described below. Alternatively, Rights holders may arrange for their financial institutions to send notices of guaranteed delivery by facsimile to DTC to be received by the Subscription Agent prior to 5:00 p.m., Eastern Time, on the Expiration Date. Facsimiles should be confirmed by telephone at DTC. The Trust will accept only properly completed and executed subscription certificates actually received at any of the addresses listed below, prior to 5:00 p.m., Eastern time, on the Expiration Date or by the close of business on the third business day after the Expiration Date following timely receipt of a notice of guaranteed delivery. Shareholders may also subscribe for the Offer by contacting their broker dealer, trust company, bank or other nominee.

4 The Fund will honor only subscription certificates received by the Subscription Agent on or prior to the Expiration Date at one of the addresses listed above. Delivery to an address other than those listed above will not constitute good delivery. Q: What is the contact information for the Information Agent? Information Agent: AST (877) Description of the Rights Offering Offering: Rights Ratio/ Primary Subscription Over-Subscription Privilege: Non-Underwritten, Non-Transferable Rights Offering 1-for-3: Record date shareholders will be issued one right for each share of common stock held as of the Record Date. Three rights will be required to purchase one newly issued share at the subscription price (the "Primary Subscription"). Shareholders issued fewer than three rights will be permitted to purchase one share pursuant to the Primary Subscription. Record date shareholders who fully exercise their rights may subscribe for shares not otherwise subscribed for as a result of unexercised rights. If over-subscription requests exceed the number of available shares, such available shares will be allocated on a pro rata basis based on the number of shares owned by such shareholder held on the record date. In addition, the Fund in its sole discretion may elect to issue additional common shares in amount up to 25% of the common shares issued in the Primary

5 Subscription. Any Record Date Shareholder who is issued fewer than three Rights may subscribe for one full common share in the offering. Transferability: Subscription Price: Rights issued will not be transferable. Rights not exercised will expire without residual value at the close of business on the Expiration Date. The subscription price per common share will be determined based upon a formula equal to the lesser of 95% of the reported net asset value or the average of the last reported sales price of the Fund s common shares on the NYSE on May 29, 2018 (the Expiration Date) and on each of the four trading days preceding the Expiration Date. 3. Subscription Logistics - Subscription Logistics / How to Exercise your rights:

6 Shareholders may also subscribe for the offer by contacting their broker dealer, trust company, bank or other nominee.